CRM Framework Terry James 2006 c 2006 Terry

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CRM Framework Terry James © 2006 (c) 2006 Terry James

CRM Framework Terry James © 2006 (c) 2006 Terry James

Party n n No. Not a beach party. No beer. No dancing. CIF, or

Party n n No. Not a beach party. No beer. No dancing. CIF, or customer information file, lists just customers. When a CIF includes all people with all relationships and roles to our firm, then it’s called an Involved Party database. Involved Party: a generic term meaning party (anyone) who is involved with your company; employees, suppliers, clients, … (c) 2006 Terry James 2

How we got here. n n n Each LOB (line of business) would keep

How we got here. n n n Each LOB (line of business) would keep track of its own clients. The LOB would usually use an account number to track its clients. Example: Toronto Hardware Account number: Client name : Amount spent: etc. 0000150 : Wendy’s : $50000. 00 (c) 2006 Terry James 3

LOB Account number n The LOB has a lot of shortcomings. n n It

LOB Account number n The LOB has a lot of shortcomings. n n It does not know anything about customers outside the division. It has no role information. n n If an employee buys a product, his data looks like simply another customer, no employee discount or number. If a supplier buys a product, again the CIF likely won’t show it. (c) 2006 Terry James 4

CIF files n Common for the CIF file to be copied n different groups

CIF files n Common for the CIF file to be copied n different groups for different purposes n n perhaps to merge with other CIF files If you have 2 copies, which is the authoritative source n n The authoritative source is the trusted file you use if it is not clear which is correct Always update the authoritative source first, then copy from it, never update the copied file or you will lose track of changes to many copied files. (c) 2006 Terry James 5

Trusted data n How long does it take for a copied CIF to be

Trusted data n How long does it take for a copied CIF to be different than the original? n n Probably a few nanoseconds if you do millions of transactions a day As soon as your copy is not current, you are working with dirty data n Dirty data is simply poor quality data, lacking in accuracy, consistency, or integrity. (c) 2006 Terry James 6

Analysis Patterns n n Martin Fowler wrote ‘Analysis Patterns’ which are best-of-breed, proven business

Analysis Patterns n n Martin Fowler wrote ‘Analysis Patterns’ which are best-of-breed, proven business analysis solutions. For CIF, he provided the Party concept. Address Person Organization Phone (c) 2006 Terry James 7

Leading Edge Data Model INVOLVED PARTY Person Organization Products Relationships and Roles Demographics, contacts,

Leading Edge Data Model INVOLVED PARTY Person Organization Products Relationships and Roles Demographics, contacts, security, products, accounting, relationships (c) 2006 Terry James 8

Involved party (IP) model n n You can ask what organization a client belongs

Involved party (IP) model n n You can ask what organization a client belongs to, what role he has there, and what relationship he and his organization has with your company. You can reverse questions and ask which customers are in an organization that your have sold products to, and which customers are not in an organization as customers. (c) 2006 Terry James 9

Example n n What people have I sold computers to at Honda? What group

Example n n What people have I sold computers to at Honda? What group were they in? Sales, Service? Are there any groups at Honda I have not sold computers to? Can I get an introduction from existing clients? Are any Honda employees members of my Board of Trade team? (c) 2006 Terry James 10

Prospects and Suspects n Prospects are potential clients, but have not bought anything? n

Prospects and Suspects n Prospects are potential clients, but have not bought anything? n n Suspects are customer lists you bought from another company n n n They may have asked for pricing, asked for a demo, but not paid any money yet. Suspects in particular are known for poor data quality in general. The data could be old, out-of-date, captured incorrectly, deliberately wrong (client fraud), etc. Be careful about dumping poor data into your authoritative customer database. (c) 2006 Terry James 11

CRM Basics Customer reaches for service E-mail IVR Web Branch Master Party file Multi-channel

CRM Basics Customer reaches for service E-mail IVR Web Branch Master Party file Multi-channel offering- but ONE customer file! (c) 2006 Terry James 12

One customer file n Many functions but one party file Accounting n Sales Operations

One customer file n Many functions but one party file Accounting n Sales Operations Many divisions – but ONE party file. USA division n HR Asia Division Many departments – but ONE party file Auto dept. Motorcycles (c) 2006 Terry James Lawnmowers 13

What is a Framework? Rather than build one element at a time, build a

What is a Framework? Rather than build one element at a time, build a framework within which new elements will fit as you add them. Good framework removes duplication, ensures integration. Create a framework for future client services without duplicating client code (c) 2006 Terry James 14

What’s in the Framework? 1) Single sign-on Demographics SSO EAI Data conversion 2) Channel

What’s in the Framework? 1) Single sign-on Demographics SSO EAI Data conversion 2) Channel independent middleware (e. g. EAI) 3) Dispatcher –route transactions to proper legacy system. The framework will have infrastructure services to permit a fully integrated CRM solution. (c) 2006 Terry James 15

SSO n What is single sign-on? n n n It is one logon and

SSO n What is single sign-on? n n n It is one logon and password to all your systems Makes it look like you have one company where everyone helps and works together Why do you want it, what does it provide? n n Easier for customers, easier for employees toremember one password and logon Consistent rules, and less expensive if you use one security system (c) 2006 Terry James 16

SSO n Where do you place the security? n n n In the front

SSO n Where do you place the security? n n n In the front end device, in the legacy application? Rule is put as much security as reasonable as far away from your central operation as possible. Likely have many levels. What goes in the security directory? n n n Duplicate data with the Party file? Yes, at least the name and contact as a pointer. Smart to keep highly sensitive, encrypted passwords in a very restricted separate file (c) 2006 Terry James 17

EAI n What is EAI software? n n What does it do? n n

EAI n What is EAI software? n n What does it do? n n EAI permits all your applications to talk to each other and work as a unit Translates data into needed formats Provides correct communication methods and protocols for each application Where do you get it? n n Enterprise Application Integration Many vendors, IBM, Tibco. How much does it cost? n Fairly expensive. (c) 2006 Terry James 18

CRM – Level 1 n Profitability analysis n n Client comments n n n

CRM – Level 1 n Profitability analysis n n Client comments n n n Personal, then business. Fax, email, vacation address, cell phone, … Segmentation n n Staff comments: (eg. deadbeat, high potential) Demographics n n How much profit from each client? Use profitability to segment clients into tiers, top, middle, bottom. Personalization n Tailor to client needs, no mass mailings to all regardless of need. (c) 2006 Terry James 19

CRM Level 2 n House-holding n n Client profile n n n Expand profile

CRM Level 2 n House-holding n n Client profile n n n Expand profile with dealings outside your firm Acquire credit and collections history Channel management n n Include relationships starting at home, who is the client living with, what are family needs? Know and use your client favorite communication channel (email, phone, face-to-face) Roles and Relationships n Add client organization and role (supplier, competitor, employee, or partner, …? ) (c) 2006 Terry James 20

CRM Level 3 n Client acquisition n n Opportunity n n n Cross-sell, up-sell,

CRM Level 3 n Client acquisition n n Opportunity n n n Cross-sell, up-sell, add-on, deluxe model Channel optimization – move to least costly channel Channel integration n n Have client provide referrals Every client touch-point adds to the profile Dynamics n n n Not locked into fixed, yearly goals Adjust sale goals by minute as client profile expands Right product, right client, right time, right place (c) 2006 Terry James 21

CRM Level 4 n Micro-segmentation n Predictive modeling n n n 1 client =

CRM Level 4 n Micro-segmentation n Predictive modeling n n n 1 client = 1 segment Every client has own strategy for next sale Tracked roles and behavior Use known client patterns to predict client actions Product development n Tailor products to meet client needs based on behavior and predictive analysis (c) 2006 Terry James 22

Profitability n n With improved micro-segmentation, decision making, and dynamics, fine tune the profitability

Profitability n n With improved micro-segmentation, decision making, and dynamics, fine tune the profitability goals, future sales and share of wallet. What is the balance between good company profit and good client profit? (c) 2006 Terry James 23

Delinquent clients n Treat the client appropriately when delinquent. n n n It could

Delinquent clients n Treat the client appropriately when delinquent. n n n It could be our poor service – not their fiscal irresponsibility Prioritize the level of recovery so we don’t spend more recovering the client than they are worth Be proactive in reducing or increasing fees. (c) 2006 Terry James 24

Optimization n Channel Optimization n Move clients to the least costly channel that meets

Optimization n Channel Optimization n Move clients to the least costly channel that meets their needs. n n n Example: Web $0. 07, Phone - $0. 35 Face - $1. 00 Client may not want costly personal sales visits. Sales delivery standards n n Match the value of service to the client value. Be aggressive at moving low value clients to low cost communication channels. (c) 2006 Terry James 25

Client acquisition Client retention Product development Relationships Client management Segmentation IP database Client service

Client acquisition Client retention Product development Relationships Client management Segmentation IP database Client service Profitability analysis Client channels Cross sell (c) 2006 Terry James 26

Metrics n Measure before CRM and after n n n How many enquiries for

Metrics n Measure before CRM and after n n n How many enquiries for a 1000 flyers How many sales? What is you add discount? n n How many lost clients did you recapture? n n n Indicates cherry-picker clients Number, total balance involved? How much faster is service per call? How many clients using cheaper channels? (c) 2006 Terry James 27

Client metrics n Score the client on: n n n n Next product most

Client metrics n Score the client on: n n n n Next product most likely to buy Client risk Client profitability Propensity to buy Client potential Client vulnerability Rank by the product most likely to buy and the expected value of that product. Marketing and campaigns are tailored accordingly (c) 2006 Terry James 28

Metrics n Some quantitative metrics on the sales person n n n Response rate

Metrics n Some quantitative metrics on the sales person n n n Response rate – number of applications divided by number of offers Approval rate – approved applications divided by applications Net present value – by campaign and account Delinquent – number of accounts that are delinquent and the balance involved. Roll rate – number delinquent clients divided by number of clients Roll back rate – number of clients returning divided by number of clients Channel usage metrics – by average channel cost. (c) 2006 Terry James 29

Client Decision Profile Value Proposition Client management Pricing: Preferred Service guideline: Premium Service: VIP

Client Decision Profile Value Proposition Client management Pricing: Preferred Service guideline: Premium Service: VIP Account management: Agent Channel: E-mail Propensity to buy: Average Current offer: Movie Client prosperity: Promising channel, no connect fee Response offer: basic Credit: Excellent (c) 2006 Terry James 30